Why is the Mall of America a Marketing Success?

I began studying the Mall of America (MoA) more than a decade ago. With retailing as a primary teaching and research interest, I was able to witness the birth and subsequent growth of the country’s best-known retail icon.

The idea to build the largest enclosed retail and family entertainment complex in the United States came from the Ghermezian Brothers who had developed the West Edmonton Mall in Alberta, Canada. The Ghermezian Brothers predicted that the MoA would attract local families as well as tourists.

The MoA was built in Bloomington, Minn. on the former site of Metropolitan Stadium (home plate is still preserved inside). Many predicted it would fail, yet it continues to prosper. So why has it been such a marketing success?

Innovation. The MoA created something new and different for retailers and consumers. The growth of regional malls slowed in the 1980s as the market became saturated. Potential for new malls was being stripped away by discounters and category killers located in more convenient free-standing sites and strip shopping centers.

Still, many national retailers were seeking new shopping venues. The Twin Cities market was large, growing, upscale and “under stored.” It had been 15 years since a new regional mall had been built, resulting in low retail vacancy rates and high demand for prime retail space. Consumer behavior also was changing. Consumers increasingly became buyers rather than shoppers. They preferred the convenience and price of discounters, and the huge selection and pricing of category killer superstores. The MoA countered these trends with an innovative concept that combined retailing and entertainment that met the needs of retailers and customers alike.

Location. The Twin Cities is the nexus of business, transportation, culture, entertainment and retailing in the Upper Midwest. It has an extensive sphere of influence that made it a natural location for the MoA. Similarly, cold winters and hot summers favored development of the mall just as it did for Southdale in Edina, the first fully enclosed, climatically controlled regional mall.

Size. The size of the MoA – 4.2 million square feet – towers over local malls and increased its national and international draw. The mall has twice as much retail space and more than three times as much total space as its nearest local rival.

Market segmentation. The MoA had to support its size by offering something for everyone. The entertainment options reflect this diversity: Camp Snoopy, Lego Land and Cereal Adventures for families; the Upper East Side’s clubs, games and movies for adults; and Underwater World and special events for everyone.

Retail Mix. The size of the MoA made it possible to do many things other malls could not. In 1992 inventory showed that anchor stores accounted for only 36 percent of the space compared to 64 percent for specialty stores. This enabled the MoA to have more than 520 stores compared with less than 150 at other malls. The inventory also reflected a heavy presence of eating and drinking establishments, services, furniture and furnishings, but was light on apparel and accessories (the mainstay of other malls). There also was a wide range of stores from discounters to upscale shops.

Unique stores. Three of the MoA’s anchors – Nordstrom, Macy’s and Bloomingdale’s – have their only local store at the MoA. In another study with colleague Lorman Lundsten and research assistant Kevin Knutson, we found 196 stores unique to the MoA compared with 37 at its closest competitor. The MoA’s entrepreneurial program and leasing options make it attractive to start-ups, and the size and large number of shoppers – more than 40 million a year – support the diversity and unique offerings of the stores.

Drawing power. Our 2002 holiday shopping survey revealed that the Mall of America is king of malls in local shoppers’ minds. Twenty-three percent of the survey respondents planned to shop the MoA compared to 19.1 percent for the next highest location, and it draws shoppers from all areas of the Twin Cities. The mall has refocused its efforts locally as the result of the decline in international air traffic, which makes up 6 percent of the mall’s visitors.

Promotion. MoA launched a highly successful worldwide public relations campaign the year before and the year after the mall opened. The campaign included numerous media events and travel packages that created a snowball effect and resulted in great “word-of-mouth” advertising.

In 1995 I was asked by MoA management to review and revise the economic impact statement they provided to the state. In the review I found the total financial impact of the mall to be more than $1.4 billion.

The state knows a good tourist draw when it sees one. It has added a tourist information store at the mall that prominently features the MoA alongside our more than 10,000 lakes in its Explore Minnesota promotions. More than anything, this might be the biggest testament to the impact the Mall of America has had on our state – a success story few had dreamed possible.

Dave Brennan holds a Ph.D. from Kent State University and is a professor of marketing and co-director of the Institute for Retailing Excellence in the College of Business. He has 12 years marketing experience with Target, General Tire and The St. Paul Companies, and has taught for 24 years, including the last 15 at St. Thomas.